Red Hat CEO explains business model of 21st century, benefits of open source

Red Hat President and CEO Jim Whitehurst opened the third year of Fidelity Investment's lecture series "Leadership in Technology" with his address entitled "The Open Source Opportunity," Tuesday night in North Carolina State University Engineering Building II. Red Hat is one of the fastest growing and most profitable software companies in the country, and "we do that by giving everything we do away," said Whitehurst. According to him, the company's success is not individual to Red Hat. "It's the open source model," he said. "Or, more broadly, the power participation." The open source model makes information and ideas free and open to the general public, and participation and collaboration add value to that idea, according to Whitehurst. He cited Wikipedia, the Human Genome Project and American Idol all as examples of open source models generating superior products. Red Hat applies this idea to the development of Linux. The shift to open source, despite its success at Red Hat, remains relatively undeveloped, a result of the previous century's reliance on physical products and property instead of intangible ideas. According to Whitehurst, by forcing ideas into the mold of property, those ideas, and the wealth of the company, lose value. "Here's the problem," he said. "In the twenty-first century, where much, much more of the capital is information, locking up that information suboptimizes the value of that capital." David Bleaking, senior in computer science, agrees with Whitehurst's appraisal of the slow shift. "I think a lot of the major companies are born and raised in the twentieth century," he said. "It'd be difficult to migrate from such an old, engrained process." He also thinks the open source business model is an important one. "I wasn't really sure how Red Hat made money on an open source product," Bleaking said. "[Their model] brings to light possibilities of perhaps different applications of the same idea." Chandler Willoughby, a twelve-year-old who attended and participated in the question and answer session following the address, already has some ideas for such applications. "[Open source] could unlock so much more potential," he said. According to Willoughby, iTunes and Microsoft are both products which could become easier to use, with more benefits, if open source gave users the opportunity to provide input on design and how the interface operates. However, the open-source model will not dominate the job market most students will find themselves working in. "Many companies are still in the physical world, with physical products," Whitehurst said, which is something students will have to deal with. "Go in and recognize these companies weren't structured to enable and inspire the workforce. Do your best to work in the system," he said. "They're not trying to stifle their workforce; they just haven't thought of it." This paradigm shift has implications for a different type of leader as well. According to Whitehurst, the cult of the egocentric, controlling CEOs is being replaced by more humble leaders, such as Steve Jobs and Eric Schmidt, who are "fostering this group of brilliant people," "appreciate ideas," and are only happy if they "brought the best out of their team," he said. "As soon as you try to lead by brute force and exert your power," Whitehurst said, "you're destroying the very community which can be so powerful." According to Whitehurst, being a catalyst in community is an integral part of Red Hat's success, success which includes the company's second-quarter profit increase of 37 percent, a better-than-expected growth despite the effects of the recession, according to The Wall Street Journal.

http://www.technicianonline.com/news/red-hat-ceo-explains-business-model-of-21st-century-benefits-of-open-source-1.1931790

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